Inform Phase Flashcards by Rob Zelada

Three capabilities used heavily during the Inform phase are in the Domains:

Understand Cloud Usage & Cost

Quantify Business Value

Manage the FinOps Practice

How well did you know this?

Not at all

Perfectly

Two FinOps Principles supported during Inform phase

Everyone takes ownership for their cloud usage

FinOps reports should be accessible and timely

How well did you know this?

Not at all

Perfectly

Inform: T/F: The inform phase is executing once

False. The on-demand and elastic nature of the cloud, coupled with complex pricing discounts, requires organizations to continuously revisit the Inform phase to understand how they are currently performing, in order to support data-driven business decisions to improve value in later phases.

How well did you know this?

Not at all

Perfectly

Inform: What is the UI of FinOps

The reports and dashboards created by FinOps Team

How well did you know this?

Not at all

Perfectly

Inform: Treat your reports and data as

Production

How well did you know this?

Not at all

Perfectly

Inform: T/F: People don’t get much use from Self-Service Reporting

False. Engineering in particular

How well did you know this?

Not at all

Perfectly

Inform: Adopting FOCUS

will enable you to align around a common lexicon, utilize FinOps Use Cases to run queries, and build confidence and trust with personas around data

How well did you know this?

Not at all

Perfectly

Inform: Type of Cost Metrics (4)

List Cost
Effective Cost
Billed Cost
Contracted Cost

How well did you know this?

Not at all

Perfectly

Inform: List cost

List Cost: Cost calculated by multiplying List Unit Price and the corresponding Pricing Quantity

How well did you know this?

Not at all

Perfectly

Inform: Effective Cost

effective Cost: Cost inclusive of the impacts of all reduced rates and discounts, augmented with the amortization of relevant purchases (one-time or recurring) paid to cover future eligible charges

How well did you know this?

Not at all

Perfectly

Inform: Billed Cost

Billed Cost: A charge serving as the basis for invoicing, inclusive of all reduced rates and discounts while excluding the amortization of upfront charges (one-time or recurring)

How well did you know this?

Not at all

Perfectly

Inform: Contracted Cost

Contracted Cost: Cost calculated by multiplying the Contracted Unit Price and the corresponding Pricing Quantity

How well did you know this?

Not at all

Perfectly

TF Inform: you should use only one Anomaly Detection Method

False. Various altering methods work in different scenarios.

How well did you know this?

Not at all

Perfectly

Inform: Examples of Maturity Phases

Crawl: Understand anomalies happen, manual checks
Walk: Begin using some automated detection, reporting, tooling
Run: Alerting integration, auto routing to teams, post-mortems

How well did you know this?

Not at all

Perfectly

Inform: As a practitioner, it is your responsibility to understand your organization’s cloud efficiency goals and work with other FinOps Personas to translate those goals into benchmarks like KPIs and unit metrics. As you benchmark, work to develop KPIs that make sense to compare against one another

How well did you know this?

Not at all

Perfectly

Inform: Different benchmarks will measure …

the performance of different teams.

Inform: Sample KPIs from the FinOps KPI library(opens in a new tab) that can be used when benchmarking.

Hourly Cost per CPU Core: Measures the average cost per CPU core - link(opens in a new tab)
Percent of Compute Spend Covered by Commitment-Based Discounts: measures the percentage of compute cost (excluding Spot) covered by the commitment-based discount for the previous month - link(opens in a new tab)
ETL Processing Time: measures the cycle time taken to complete the ETL (Extract, Transform, Load) processes - link

Inform: Benchmarking Maturity Examples

Crawl: Identify KPIs as benchmarks
Walk:Empower teams to compare their performance to others with self-serve information
Run: Identify and manage a curated set of KPIs and unit metrics to benchmark at a variety of levels

Inform: Cost allocation (or cost attribution) is the most…

important thing you will do as someone involved in FinOps

Inform: With cost allocation you can…

…begin to individually trend each team’s forecasted growth (versus the whole company’s spend) and set budgets for teams so they know how they are doing against their targets.

Inform: The principal mechanisms for allocating cloud cost are dividing usage into two:

Resource-level metadata-like tags (AWS, Azure, or Google Cloud) or labels (Google Cloud only). This is a tag-based approach.

AWS accounts, Google Cloud projects, Azure subscriptions or resource groups

Inform: cost allocation…if you are going to start with only one strategy, use this one

Hierarchy (accounts subscriptions, etc). Manadory, less granular, etc

Inform: By combining both a hierarchy-based and a tag-based strategy, you can…

use tags for the fine-grained details while using the hierarchy-based strategy to catch the remaining unallocated costs.

Inform: To successfully build a tag- and/or hierarchy-based allocation strategy within your organization, you must do three key things.

Communicate your plan
Keep it Simple
Formulate your questions

Inform: Three ways to handle shared costs

Proportional: Based on relative percentage of direct costs * Even split: Split the total amount evenly across targets * Fixed: User-defined coefficient (the sum of coefficients needs to be 100%)

Inform: Showback vs chargeback

Showback: show teams what they are spending, but the dollars are allocated internally from a central budget. Chargeback: happens when the actual cost being incurred is allocated back to the budget or profit and loss (P&L) of an individual team

Inform: Chargeback reports are MECE

They are mutually exclusive and collectively exhaustive (sometimes referred to as MECE, in other words, if you add up all the chargeback reports, they will equal all of your cloud spend)

Inform: Chargeback Maturity Examples

Crawl:Consistently post and share chargeback data for the finance, FinOps, and accounting teams Walk: Ensure finance, FinOps, and accounting are actively collaborating on decisions related to maturing the chargeback file, level of detail, and determining initial strategy for shared cost charges Run:Empower finance to be self-sufficient in reconciling spend or answering questions regarding chargeback without intervention from the FinOps team. Fully automate chargeback data each month into the financial system with the ability to support charging, mark-ups, and allocation both in advance and in arrears

Inform: When finance, engineering, and leadership build models to forecast cloud spend reliably and accurately,

cloud cost forecasting will inform investment and operational decisions to accelerate an organization’s growth.

Inform: Forecasting maturity

Crawl: Create manual and/or ad-hoc forecast models Walk: Update forecast on a regular cadence Run: Generate forecast models that are a combination of rolling, trend-based and driver-based

Inform: You will get better at budgeting if you do it weekly and assess your results. Forecasting and budgeting are like any other skill. Practice now before the annual budget cycle so you get a feel for it and start to build your skills!

TF Inform: Finops is about saving money

False. It's about creating value.

Inform: Finops often gets pushback on general sitdown reviews of spend. Do this instead

Give teams cost targets or goals.

Inform: Four levels of budgeting

No one is budgeting at all. Spend what you did last year. Create a cost "takeout" goal. This type of budgeting looks at the forecasted spend from a rolling forecast and then reduces it by a prescribed amount. This can provide the right incentives to teams, but they’re often arbitrary and not tied to any specific business outcome. Use unit economics and performance metrics.

Inform: Budgeting maturity

Crawl: Review and use forecasts to create budgets manually Walk:Establish budget cycles on a regular cadence but not automated Run:Institute complex forecast models aggregated from many system or application teams to create forecasts using a variety of metrics and parameters